Toyota, one of Japan’s largest companies, gave in to union workers’ requests for increased compensation this week, providing the largest pay increase in two decades.
During the initial rounds of discussions, the corporation agreed to the union’s demands.
Koji Sato, the new president of Toyota, expressed hope that it will send a signal to others in the automobile sector.
According to the corporation, the wage hikes would apply to part-time and senior employees, as well as a one-time bonus payment equal to 6.7 months’ salaries.
Other Japanese automakers followed soon after. Honda, for example, revealed just hours later that they had agreed to a 5% rise in basic pay, the company’s largest compensation boost in more than 30 years.
The pay hikes come amid record inflation in Japan.
While the country avoided a recession last year, growth slowed significantly. As a result, Prime Minister Fumio Kishida has called on businesses to increase pay to stimulate consumer spending amid raising prices.
Inflation in Japan currently sits at 4%, a 40-year high.
Companies outside of the auto industry have heeded the PM’s call as well.
Video game giant Nintendo recently announced it would be increasing its workers’ base pay by 10% and retail clothing company Fast Retailing, owner of Uniqlo, announced last month that they would be boosting pay by upwards of 40%.
Toyota and the union federation that represents over 350,000 workers declined to provide the exact percentage of the increase in pay.
